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Docket Number

No. 7927SC1144

Attorney(S)

Charles D. Gray III for plaintiff appellees Dallas Electrical Contractors, Inc. and Dallas Plumbing Company. Stewart and Lowe, by Michael David Bland, for plaintiff appellee W. R. Mathis. Horace M. DuBose III and Lindsey, Schrimsher, Erwin, Bernhardt Hewitt, by Robert J. Bernhardt, for defendant appellants.

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Smart Summary

Case Summary: SPALDING DIVISION OF QUESTOR CORPORATION, et al. v. HORACE M. DuBOSE III, TRUSTEE, et al.

Factual and Procedural Background

This appeal arises from plaintiffs' action in the Superior Court of Gaston County to declare an execution sale and the sheriff's deed issued pursuant thereto null and void. Defendants had obtained judgments against A. C. Burgess, Jr., issued executions on Burgess's house and lot, and caused the sheriff to post notice of sale. Plaintiffs held junior judgments and liens against Burgess for labor and materials on the same property.

At the execution sale on defendants' judgments, defendants bid $32,556.88 and paid by cancelling their judgments rather than by cash payment. Plaintiffs did not bid at the sale and no upset bid was filed within the ten-day period following the sale. The Clerk of Superior Court of Gaston County entered an order confirming the sale, and, with no appeal from that order, the sheriff executed and delivered a deed conveying the property to defendants.

Plaintiffs filed suit in superior court alleging the sale and deed were void because the bid was not paid in cash in violation of N.C.G.S. 1-339.47. Defendants moved to dismiss under Rule 12; plaintiffs moved for summary judgment. The trial court denied defendants' motion to dismiss and entered summary judgment for plaintiffs. Defendants appealed. The Court of Appeals heard the matter and issued the opinion filed 6 May 1980.

Legal Issues Presented

Whether the superior court had jurisdiction to entertain plaintiffs' independent action attacking the execution sale and the clerk's order of confirmation, or whether the action constituted an impermissible collateral attack on the clerk's order of confirmation.
Whether the clerk of superior court had authority under Article 29B of Chapter 1 of the General Statutes to permit defendants to use their judgments in lieu of cash to pay their bid at the execution sale.

Arguments of the Parties

Defendants' Arguments (Appellants)

The superior court lacked jurisdiction because plaintiffs' action was a collateral attack upon the clerk's judgment of confirmation of the execution sale; the proper remedy was by appeal from the clerk's order or by motion in the cause.
Raised (as an asserted issue) whether the clerk had authority under Article 29B of Chapter 1 to permit defendants to use their judgments as payment of their bid.

Plaintiffs' Arguments (Appellees)

Plaintiffs contended the execution sale and resulting sheriff's deed were void because defendants did not pay their bid in cash, in violation of N.C.G.S. 1-339.47.
Plaintiffs argued they were not collaterally attacking the clerk's order but were seeking to set aside the sheriff's deed and the sale as void.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Muse v. Edwards, 223 N.C. 153, 25 S.E.2d 460 (1943)	That an appeal must be taken within ten days after entry of the clerk's order to entitle the judge of superior court to review the ruling.	Cited to support the proposition that an appeal from the clerk's judgment is required to give the superior court jurisdiction to review the clerk's order.
Ramsey v. R. R., 253 N.C. 230, 116 S.E.2d 490 (1960)	That there must be an appeal from the clerk's judgment to give the superior court jurisdiction.	Used to show the superior court does not acquire jurisdiction where no appeal from the clerk's judgment has been taken.
Gravel Co. v. Taylor, 269 N.C. 617, 153 S.E.2d 19 (1967)	That the superior court lacks jurisdiction in the absence of an appeal from the clerk's judgment.	Applied to reinforce that lack of appeal deprives the superior court of jurisdiction over complaints about the clerk's confirmation.
Williams v. Dunn, 163 N.C. 206, 79 S.E. 512 (1913)	That a collateral attack is not a permissible method to avoid an execution sale; the remedy is direct (motion in the cause or appeal).	Cited to support the rule that plaintiffs cannot avoid an execution sale by collateral attack and must proceed by proper direct remedy.
Henderson v. Moore, 125 N.C. 383, 34 S.E. 446 (1899)	That the proper procedure to set aside an execution or sale thereunder is by motion in the cause and not by independent action.	Relied upon to show the appropriate remedy is a direct proceeding rather than an independent collateral attack.
Henderson County v. Osteen, 292 N.C. 692, 235 S.E.2d 166 (1977)	That the procedure to set aside an execution or sale is by motion in the cause.	Applied to support that independent actions seeking to set aside executions are improper; the remedy is in the original cause.
Finance Co. v. Trust Co., 213 N.C. 369, 196 S.E. 340 (1938)	That the proper remedy to challenge an execution or sale is by motion in the cause.	Used to confirm the consistent line of authority requiring direct procedural remedies rather than collateral attacks.

Court's Reasoning and Analysis

The court first identified that the clerk of superior court has original jurisdiction to enter orders confirming execution sales and cited N.C. Gen. Stat. 1-339.67 for the proposition that no sale of real property may be consummated until confirmed by the clerk. The court then explained that appeals from the clerk to the superior court judge are governed by N.C.G.S. 1-272, which requires an appeal within ten days after the clerk's entry.

Relying on prior decisions (Muse v. Edwards; Ramsey v. R. R.; Gravel Co. v. Taylor), the court concluded that the superior court does not acquire jurisdiction to review the clerk's order in the absence of an appeal from the clerk's judgment. Because plaintiffs did not appeal the clerk's order of confirmation, the court found that plaintiffs' independent action in superior court seeking to void the sale and deed amounted to a collateral attack on the clerk's order.

The court further explained that the correct procedural means to challenge an execution sale or a sale under execution is to proceed directly—by motion in the cause or by appeal—citing a line of authorities (Williams v. Dunn; Henderson v. Moore; Henderson County v. Osteen; Finance Co. v. Trust Co.). Concluding that plaintiffs had chosen an improper remedy, the Court of Appeals held the superior court erred in denying defendants' motion to dismiss and in granting summary judgment for plaintiffs. The appellate court therefore did not reach the separate substantive question concerning the clerk's authority under Article 29B to permit payment of a bid by cancelling judgments.

Holding and Implications

Holding: The Court of Appeals reversed the judgment of the superior court and remanded with instructions to enter a judgment allowing defendants' motion to dismiss plaintiffs' action.

Implications: The direct consequence is that plaintiffs' independent action in superior court to void the execution sale and sheriff's deed was dismissed for being an impermissible collateral attack on the clerk's order of confirmation. The opinion instructs that the appropriate remedies to challenge an execution sale or clerk's confirmation are by motion in the cause or by timely appeal from the clerk's order. The court expressly did not address the separate substantive issue regarding the clerk's authority under Article 29B to permit payment of a bid by cancellation of judgments.

Judges PARKER and HILL concurred.

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SPALDING DIVISION OF QUESTOR CORPORATION, DALLAS ELECTRICAL CONTRACTORS, INC., DALLAS PLUMBING COMPANY. W. R. MATHIS AND WITTEN SUPPLY COMPANY v. HORACE M. DuBOSE III, TRUSTEE, AND ROBERT J. BERNHARDT, TRUSTEE, AS THEIR INTERESTS MAY APPEAR

Execution 15 — collateral attack on execution sale Plaintiffs' action in superior court to declare an execution sale and sheriffs deed void because defendants did not pay their bid in cash but merely cancelled judgments against the property owner constituted an impermissible collateral attack upon the order of confirmation of the execution sale by the clerk of court, plaintiffs' remedy being to proceed directly either by motion in the cause or appeal.

This is an action by plaintiffs to declare null and void an execution sale and to declare void a deed issued pursuant to the execution sale. Plaintiffs allege the execution sale is defective because defendants did not pay cash for the property, violating N.C.G.S. 1-339.47.

Defendants moved to dismiss pursuant to Rule 12, North Carolina Rules of Civil Procedure, and plaintiffs moved for summary judgment. The motions were heard upon affidavits and stipulations and the trial court denied defendants' motion to dismiss and entered summary judgment for plaintiffs. Defendants appeal.

Defendants secured judgments against A. C. Burgess, Jr. and issued executions upon Burgess's property. Burgess owned a house and lot, and the sheriff posted notice of sale of this property under defendants' executions. Meanwhile, plaintiffs, who had claims against Burgess for labor and materials used in construction of the house, filed liens and obtained judgments on them against Burgess. Plaintiffs' judgments are junior in time to defendants' judgments.

At the execution sale upon defendants' judgments, defendants bid $32,556.88, which was paid by cancelling defendants' judgments, rather than by payment in cash. Plaintiffs did not bid at the sale and no upset bid was filed within the ten-day period. Thereafter, the Clerk of Superior Court of Gaston County confirmed the sale by order of confirmation. No one appealed from the clerk's order of confirmation. Upon order of the clerk, the sheriff executed and delivered a deed conveying the property to defendants.

MARTIN (Harry C.), Judge.

Defendants contend the superior court did not have jurisdiction of the cause of action alleged by plaintiffs as it is a collateral attack upon the judgment of confirmation by the clerk of superior court. If the court had jurisdiction, we are faced with the question whether the clerk had authority under Article 29B of Chapter 1 of the General Statutes of North Carolina to permit defendants to use their judgments as cash in the payment of their bid to the sheriff on the execution sale.

The clerk has original jurisdiction to enter orders confirming execution sales. "No sale of real property may be consummated until the sale is confirmed by the clerk of the superior court." N.C. Gen. Stat. 1-339.67. Appeals from the clerk of superior court to the judge are controlled by N.C.G.S. 1-272, containing the following: "An appeal must be taken within ten days after the entry of the order or judgment of the clerk . . ." The appeal must be taken within ten days after the clerk's judgment to entitle the judge of the superior court to review the ruling. Muse v. Edwards, 223 N.C. 153, 25 S.E.2d 460 (1943). There must be an appeal from the clerk's judgment to give the superior court jurisdiction. See Ramsey v. R. R., 253 N.C. 230, 116 S.E.2d 490 (1960). The superior court does not acquire jurisdiction where there is no appeal from the clerk's judgment. Gravel Co. v. Taylor, 269 N.C. 617, 153 S.E.2d 19 (1967).

Plaintiffs did not appeal from the judgment of confirmation by the clerk. Defendants contend plaintiffs' action is a collateral attack upon the clerk's order and that it cannot be maintained as their remedy is by appeal from the order of the clerk. Plaintiffs argue they are not attacking the clerk's order but are seeking to set aside the sheriff's deed. Plaintiffs ask in their complaint that the execution sale be declared null and void because defendants did not pay their bid in cash. They also ask that the sheriff's deed be declared void for the same reason. The court in its summary judgment declared that the order of the clerk is void. We hold plaintiffs are collaterally attacking the clerk's order.

Plaintiffs cannot avoid the execution sale by collateral attack; they must proceed directly, either by motion in the cause or appeal. Williams v. Dunn, 163 N.C. 206, 79 S.E. 512 (1913); Henderson v. Moore, 125 N.C. 383, 34 S.E. 446 (1899). The proper remedy to set aside an execution or a sale thereunder is by motion in the cause and not by independent action. Henderson County v. Osteen, 292 N.C. 692, 235 S.E.2d 166 (1977); Finance Co. v. Trust Co., 213 N.C. 369, 196 S.E. 340 (1938). Where the proceeding complained of is before the clerk, the additional remedy of appeal to the superior court judge is available. N.C. Gen. Stat. 1-272.

We hold the superior court erred in denying defendants' motion to dismiss and in entering summary judgment for plaintiffs. Plaintiffs have mistaken their remedy. With this ruling, we do not reach the other issue raised on the appeal.

The judgment of the superior court is reversed and the cause is remanded to the Superior Court of Gaston County for entry of a judgment allowing defendants' motion to dismiss plaintiffs' action.

Judges PARKER and HILL concur.

QUESTOR CORP. v. DuBOSE